Memorandum of Conversation, by the Chief of the Financial Division (Livesey)

Participants: Sir Cecil Kisch, Indian Supply Mission
Sir David Waley, British Treasury
Mr. Feis
Mr. Livesey

The interview was arranged pursuant to the Secretary’s reference to Mr. Feis of the British Embassy’s note37 raising the question of lend-leasing silver to India. Sir Cecil Kisch said that discussion had already been had with Mr. Harry White of the Treasury Department, looking to the lend-leasing of 4,000,000 ounces of silver per month and an additional lump amount of 100,000,000 ounces. Although there is no legal provision that paper rupees must be redeemed in metal rupees, it is very desirable that metal rupees be always available to holders of paper rupees in order that the latter may not lose confidence and that the paper currency be not depreciated by the establishment of a premium for the metal rupees. In India, as elsewhere, there has been much hoarding of everything and metal rupees are now in short supply. It is therefore desired to import 4,000,000 ounces of silver per month for new coinage. It is also desirable to have a stock of 100,000,000 ounces, the existence of which will discourage speculation from pushing the price of silver up unduly.

The United States Treasury is considering the matter and has had inquiries for certain information sent to India. In the meantime Lord Halifax had thought it desirable to bring the matter to the attention of the Secretary of State in view of its importance to India and, therefore, to the war effort.

Sir David Waley, in reply to inquiries, said that from the point of view of the silver interests in this country a sudden abnormal uprush of the price of silver in India, which might result from failure of the United States to make silver available there, and the inevitable future collapse from any such exaggerated price increase, would not be as sound a development as the exportation of silver to meet the present wartime demand. From a general economic point of view, it was, of course, obviously desirable and important to the United States to prevent the disturbance to the war effort which an uncontrolled speculation in silver in India might cause.

Mr. Feis said that should occasion arise, he was sure the Secretary of State would be glad to interest himself in obtaining full consideration of the British and Indian position in the matter. It was agreed [Page 275] that there appeared to be no immediate need of action on the part of the Department of State.

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